Carbonates losing their fizz?

- Last updated on GMT

Related tags: Soft drinks, Coffee, Alcoholic beverage, Soft drink

Bottled water, new age beverages and energy drinks are driving
growth in the global soft drinks market, but carbonates are losing
their appeal, according to a new report from market analysts

The soft drinks category has grown in virtually every market in the world over the last few years, with and has made particularly strong gains in the emerging markets, In value terms, the market increased by almost 33 per cent between 1997 and 2002, and is currently growing an annual rate of over 4 per cent, according to the report, meaning that by 2007 it should be worth around $361 billion.

The changing lifestyles, needs and expectations of children, youth, adults and families are all responsible for the strong growth of soft drinks, according to Datamonitor's Dominik Nosalik, who wrote the Innovations in Soft Drinks​ report.

"Consumers' lives have become increasingly busy and fast-paced, spawning an on-the-go culture. This has created a strong demand for refreshment in a variety of out-of-home locations thus driving soft drinks, which are more accessible and convenient than other drinks such as hot drinks and alcohol."

The development of convenience-orientated packaging in soft drinks, such as single-serve, weight-reduced cartons and packs, has played a crucial role in facilitating this. For example, Crystal Drinks in the UK launched Crystal Premium earlier this year - a 100 per cent pure orange juice in a single-serve bottle with a sports cap for convenient drinking on the hoof. Meanwhile in Germany, Nestlé has launched its indulgent iced coffee Nescafé range in a slimline cans for easy and unobtrusive portability.

Bottled water has been a key growth area for the soft drinks market, reflecting the demand for lighter and healthier beverages, and Datamonitor sees no sign of the growth slowing down. Sales are likely to rise by more than 46 per cent between 2002 and 2007, reaching 1,446 million litres, the report said.

The success of bottled water reflects the demand for lighter and healthier beverages, the desire to overcome dehydration, and for trusted sources of clean water as concerns over tap water quality have increased, the report suggested.

The health factor has been particularly important in driving product innovation. Added vitamins and minerals account for 40 per cent of all different types of enhanced bottled waters currently available on the market, according to data from Innova cited in the report.

In the same vein, sports and energy drinks have also grown in popularity, reflecting consumers' demand for products that meet the needs of active lifestyles, particularly among younger people. Energy drinks are the main drivers, as they are seen as a cool alternative to mainstream brands, and appeal to a broadening consumer base because of their functional benefits, Datamonitor said.

For example, Coca-Cola launched Burn in Spain in the summer, an energy drink with "the right kind of sugars and complex carbs"​ to ensure sustained energy. The demand for energy drinks is even attracting the interests of alcoholic drink makers such as Anheuser-Busch, which launched its energy drink brand 180 in the US in February this year, complete with vitamins C, B6 and B12 to enhance the healthiness of the product.

Energy and sports drink sales are likely to rise by 47 per cent between 2002 and 2007, the report predicts, reaching some 828 million litres.

The last few years have also seen something of a renaissance for new age beverages - so-called adult soft drinks which were particularly popular in the late 1990s. The rebirth of the category has been aided primarily by consumers' growing interest in herbal remedies. "Consumer attitudes to healthcare are changing and more people are taking responsibility for their health rather than passively accepting medical decisions,"​ said Nosalik.

"Within this desire to exercise individual decision, many consumers are looking outside the traditional realm of pharmaceuticals to herbal remedies and supplements."

This self-medication trend will continue to boost the new age beverage category, he added, with products ranging from hangover remedies and pick-me-ups to those beverages that act as insurance policies against future health problems. Datamonitor predicts that new age beverage consumption will reach around 156 million litres by 2007, an increase of 27.9 per cent over 2002.

But even though bottled waters and energy drinks are booming, carbonates still hold the largest overall share of the market, accounting for some 64 per cent of soft drinks market volumes. However, their market share is forecast to contract from just over 64 per cent in 2002 to 61.8 per cent in 2007 as consumers continue to switch to lighter, healthier alternatives.

Carbonate growth between 2002 and 2007 is likely to be a relatively modest 16.5 per cent, with global consumption reaching 6,934 million litres by 2007.

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